Confidential
Department of Transport
Reduction of transportation by road:
A shift towards Rail
Select Committee on Public Services
08 February 2012
2
Department of
Transport
Problem statement
Situational analysis
Key freight corridors
Road and rail market share
Key challenges facing both road and rail industries
Key factors contributing to the decline of the rail freight industry
Strategic thrust and programmes: Some Interventions
Key Rail Policy thrust: Some Interventions
Way forward
PRESENTATION OUTLINE
3
Department of
Transport
Deterioration of the road infrastructure
Insufficient maintenance of the road network & lack of funds
Inefficiency in freight movement – modal mix of road vs. rail
Inefficiencies of rail
Deteriorating rail infrastructure
Insufficient capacity of the railways to re-gain lost market share
PROBLEM STATEMENT
4
Department of
Transport
The road freight industry has expanded rapidly since the deregulation of the industry in 1989;
A lot of cargo has migrated to road rather than rail, due to shortcomings in the rail system;
Road freight sector carries 87% of total freight in the country;
Total volume of road freight moved in 2007 – 1,373mt;
The sector contributes 5,9% (R66b) in 2007 and total land transport contributed 6,6% (R74b) to GDP on a value added basis;
In terms of land freight distribution, road freight accounts for 50% of the tonnage in metropolitan areas, whilst rail accounts for only 1%.
SITUATIONAL ANALYSIS
5
Department of
Transport
Maputo
Lobatse
Walvis Bay
Cape Town
Durban
Gauteng
Freight flow estimate for 2003
Beitbridge
Gauteng – Beitbridge
• 17 mill tons
• 90% road freight
• 40% growth to 2020
Gauteng - Beitbridge
Gauteng – Maputo
• 15.4 mill tons
• 73% road freight
• 40% growth to 2020
Gauteng - Maputo
Gauteng – EL
• 3 mill tons
• 10% import export
• 91% road freight
• 31% growth to 2020
Gauteng – East
London
Port
Elizabeth
• 7 mill tons
• 36% import export
• 66% road freight• 39% growth to 2020
Gauteng – Cape Town
• 19 mill tons
• 10% import export
• 85% road freight
• 40% growth to 2020
Gauteng – Cape Town
Gauteng – Walvis Bay
• 4.8 mill tons
• 77% road freight
• 38% growth to 2020
Gauteng – Walvis Bay
East LondonSaldanha
SishenRichards
Bay
Gauteng – Richards bay
•Transnet Freight Rail Coallink line: 66 mill tons export coal; 8 mill tons general traffic
•Pongola corridor 17 mill tons – 95% road freight
Gauteng – Durban
• 36 mill tons
• 16% import export
• 70% road freight
• 38% growth to 2020
Gauteng - Durban
Sishen - Saldanha
•Rail-only corridor
•27 mill tons
Gauteng / Postmasburg – Port Elizabeth
KEY FREIGHT CORRIDORS
6
Department of
Transport
FOOD AND FOOD PROCESSING
BEVERAGES
TOBACCO PRODUCTS
TEXTILES, CLOTHING, LEATHER PRODUCTS AND FOOTWEAR
WOOD AND WOOD PRODUCTS
FURNITURE
PAPER & PAPER PRODUCTS
PRINTING AND PUBLISHING
INDUSTRIAL CHEMICALS
FERTILIZERS AND PESTICIDES
PHARMACEUTICAL, DETERGENTS AND TOILETRIES
PETROLEUM REFINED / PRODUCTS OF PETROLEUM/COAL
RUBBER PRODUCTS
OTHER CHEMICALS
NON-METALLIC MINERAL PRODUCTS
BRICKS
CEMENT
FERROCHROME
FERROMANGANESE
OTHER IRON AND STEEL BASIC INDUSTRIES
NON-FERROUS METAL BASIC INDUSTRIES
METAL PRODUCTS EXCLUDING MACHINERY
MACHINERY AND EQUIPMENT
ELECTRICAL MACHINERY
MOTOR VEHICLES
MAIZESOYA BEANS
SUNFLOWER SEEDVEGETABLES
WHEATPOULTRY PRODUCTS
DAIRYSUGAR CANE
OTHER AGRICULTURECOAL MINING
CRUDE PETROLEUM & NATURAL GASIRON ORE (HEMATITE)
MAGNETITECHROMECOPPER
MANGANESETITANIUM
ZINCOTHER NON-FERROUS METAL MINING
STONE QUARRYING, CLAY & SAND-PITS: GRANITE
LIMESTONE & LIME WORKSSTONE QUARRYING, CLAY & SAND-PITS:
OTHERMINING OF CHEMICAL & FERTILIZER MINERALS
OTHER NON-METALLIC MINERAL MININGOTHER MINING
BARLEY
COTTON
DECIDUOUS FRUIT
CITRUS
SUBTROPICAL FRUIT
VITICULTURE
GRAIN SORGHUM
LIVESTOCK (SLAUGHTERED)
MOTOR VEHICLE PARTS AND ACCESSORIES
TRANSPORT EQUIPMENT
OTHER MANUFACTURING INDUSTRIES
WATER SUPPLY
METHANE-RICH GAS
AVIATION FUEL
NOT LISTED AS A COMMODITY
CONTAINER TRAFFIC FULL NETT TONNAGE
COAL MINING Export / Import via DBT/MPT
IRON ORE (HEMATITE) Export
MANGANESE ExportSimplified Preference
Road - Friendly
Road and Rail friendly
Rail – Friendly
Pipeline - Friendly
NETWORK DEMAND: COMMODITY SUITABILITY
7
Department of
Transport
What is suitable freight for rail?
Longer DistancesShort-haul distribution is more
efficient on road
High Volumes Rail is a bulk mover
Big parcels in a single move
Commodity TypeTypically Bulk Minerals /
Heavy Goods / Containers
Corridor EffectConcentrated corridors attract
more traffic
CompetitiveMostly Road
Friendly
Mostly Rail
Friendly
Setting the ideal Rail vs Road market share split is a fundamental driver for future rail demand
LONG-TERM MARKET SHARE
8
Department of
Transport
8
The structure of the surface freight transport market -South Africa’s surface freight transport market (million tons)
Total surface transport900mt (310) = 280bn tonkm
Road720 (250) = 180bn tonkm
Rail180 (550) = 100bn tonkm
Current rough estimates based on 1999 base caseNote: Figure in bracket denotes average transport distance
In-house560 (225) = 126bn tonkm
For reward160 (340) = 54bn tonkm
High value commodities40 (400) =
16bn tonkm
Export machines90 (650) =
60bn tonkm
Bulk commodities50 (500) =
25bn tonkm
Rest30 (520)
Gauteng-Durban16 (600)
Gauteng-Cape Town14 (1400)
Long distance,high volume,next to rail60 (750) =
45bn tonkm
Shorter distances,lower volumes,
Shortage of rail infra100 (90) = 9bn tonkm
Coal65 (600)
Iron ore25 (800)
FREIGHT TRANSPORT 2003
9
Department of
Transport
Tonnage
1105mt (270)
Road
920mt (200)
Rail
185mt (600)
Corridor
140mt (680)
Metropolitan
580mt (75)
Rural
200mt (200)
Corridor
45mt (680)
Metropolitan
10mt (150)
Rural
30mt (475)
Sishen & Rbay
100mt (670)
Figure in brackets denotes average transport distance
Tonkm
300bn
Road
190bn
Rail
110bn
Corridor
95bn
Metropolitan
45bn
Rural
40bn
Corridor
30bn
Metropolitan
1bn
Rural
15bn
Sishen & Rbay
65bn
Income
R120bn
Road
R105bn
Rail
R15bn
Corridor
R50bn
Metropolitan
R30bn
Rural
R25bn
Corridor
R6bn
Metropolitan
R1bn
Rural
R2bn
Sishen & Rbay
R5bn
CSIR 2005
FREIGHT TRANSPORT 2004
10
Department of
Transport
Tonnage
1533mt (233)
Road
1337mt (177)
Rail
196mt (617)
Corridor
180mt (600)
11,5%
Metropolitan
777mt (77)
50,5%
Rural
380mt (179)
25%
Corridor
41mt (683)
3%
Metropolitan
8mt (250)
0,5%
Rural
47,5mt (505)
3%
Sishen & Rbay
99,5mt (673)
6,5%
Figure in brackets denotes average transport distance
Tonkm
357bn
Road
236bn
Rail
121bn
Corridor
108bn
30%
Metropolitan
60bn
16,5%
Rural
68bn
19%
Corridor
28bn
8%
Metropolitan
2bn
0,5%
Rural
24bn
7%
Sishen & Rbay
67bn
19%CSIR/USB 2006
FREIGHT TRANSPORT 2006
11
Department of
Transport
Tonnage
1578mt (237)
Road
1373mt (178)Rail
205mt (629)
Corridor
196mt (591)
12,5%
Metropolitan
793mt (77)
50%
Rural
384mt (177)
24%
Corridor
46mt (685)
3%
Metropolitan
9mt (278)
0.5%
Rural
51mt (529)
3%
Sishen & Rbay
99mt (687)
6%
Figure in brackets denotes average transport distance
Tonkm
374bn
Road
245bn
Rail
129bn
Corridor
116bn
31%
Metropolitan
61bn
16%
Rural
68bn
18%
Corridor
31,5bn
8,5%
Metropolitan
2,5bn
0,5%
Rural
27bn
7%
Sishen & Rbay
68bn
18%CSIR/USB 2007
FREIGHT TRANSPORT 2007
12
Department of
Transport
Road damage due to intensive use
Congestion, accidents & pollution caused by road
High freight volumes on road
Insufficient rail capacity – road is the default mode
Ageing rail infrastructure
Lack of integration amongst major transport modes – road, rail, air, maritime, and pipelines
KEY CHALLENGES FACING ROAD AND RAIL
13
Department of
Transport
Lack of flexibility in service offering
Insufficient investment in network and rolling stock
Limitations of out-dated technology for high volume intermodal traffic
Lack of customer focus
Restrictive working practices and insufficient drivers
Insufficient investment in training, developments and staff retention
Limitation of interoperability due to a variety of incompatible traction power, rolling stock, signaling and train radio systems have emerged on different parts of the network
FACTORS CONTRIBUTING TO DECLINE OF FREIGHT RAIL
14
Department of
Transport
Objectives Addressing the issues of:
Create efficient & integrated transport logistics system
Enable transfer of appropriate commodities to other modes
Excess freight on the roads
Poor roads (through less utilisation)
Strategic programmes Description
Integrated Transport Commission
Technical body to coordinate, evaluate & approve transport plans & investments for integration of the individual modes
Ensure balanced transport infrastructure spending across the various modes by taking into account the national interests
Alignment of Transnet’s mandate
Greater alignment of Transnet’s goals with the country’s needs
Current challenges within rail can be associated with the conflicting mandate of Transnet
Rail linkages with other modes / Inter Modal Terminals
Improve the connecting infrastructure between rail & other modes to promote a sustainable modal split
Targets for rail at ports Set specific targets for rail mode utilisation at the ports
STRATEGIC THRUST & PROGRAMMES: SOME INTERVENTIONS
15
Department of
Transport
A clear rail industry model that entails that would be determined by the outcome of the Rail Policy, which articulates on the following:
Intensive investment programme Accessibility and Competition Regulation etc
A need to expedite the implementation of the rail revitilisation programme to address the inherent inefficiencies in Rail Transport;
Introduction of new technology where possible;
Promotion of Rail Transport as a mode of choice for passenger and freight transportation and implementation of a strategy to move certain current road cargo back to rail;
KEY RAIL POLICY THRUSTS: SOME INTERVENTONS
16
Department of
Transport
Active state involvement in the facilitation of investment and private sector participation;
A need for a national programme of recruitment, training and skills development;
Implementation of a strategy to revitilise and develop branchlines;
Facilitate the introduction of Rail micro enterprises and cooperatives;
Implementation of a comprehensive strategy for safety and security ;
Establishment of local industries for local procurement .
KEY RAIL POLICY THRUSTS: SOME INTERVENTIONS (Cont)
17
Department of
Transport
Higher freight demand and insufficient capacity of the railways has led to road becoming the default choice of land transport and this need to be reversed
All stakeholders in the freight sector must come on board and contribute towards making rail a viable option, including Transnet, hence the proposal to establish an Integrated Transport Commission
The draft Road Freight Strategy being finalised
The process of finalising the establishment of a Single Transport Regulator is underway
The process of finalising the establishment of the Rail Economic Regulator is underway
The process for the development of the Rail Policy is taking shape. The draft Green Paper is currently being finalised by DoT for Ministerial approval. Further consultations on the Green Paper process is proposed as outlined below:
WAY FORWARD
18
Department of
Transport
Formal launch of the Railway Green Paper;
Undertaking stakeholder consultation;
Cluster and Cabinet processes;
Parliamentary processes;
Formal adoption of policy (White Paper) by Cabinet.
WAY FORWARD (Cont)
19
Department of
Transport
Thank you